EXHIBIT 99.2
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NEITHER THESE WARRANTS NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF THESE
WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
5,750,000 WARRANTS December 16, 2004
GLOBAL MATRECHS, INC.
WARRANTS
Global Matrechs, Inc., a Delaware corporation ("GMTH"), certifies that,
for value received, Trilogy Capital Partners, Inc. ("TRILOGY"), or registered
assigns (the "HOLDER"), is the owner of Five Million Seven Hundred Fifty
Thousand (5,750,000) Warrants of GMTH (the "WARRANTS"). Each Warrant entitles
the Holder to purchase from GMTH at any time prior to the Expiration Date (as
defined below) one share of the common stock of GMTH (the "COMMON STOCK") for
$0.01 (the "EXERCISE PRICE"), on the terms and conditions hereinafter provided.
The Exercise Price and the number of shares of Common Stock purchasable upon
exercise of each Warrant are subject to adjustment as provided in this
Certificate.
1. VESTING; EXPIRATION DATE; EXERCISE
1.1 Vesting. The Warrants shall vest and become exercisable as follows:
(i) 1,437,500 Warrants shall vest and be fully exercisable as of the date of
this Certificate; (ii) 1,437,500 Warrants shall vest and become exercisable on
January 9, 2005; (iii) 1,437,500 Warrants shall vest and become exercisable on
January 24, 2005; and (iv) the remaining 1,437,500 Warrants shall vest and
become exercisable on February 8, 2005.
1.2 Expiration Date. The Warrants shall expire on November 30, 2007
(the "EXPIRATION DATE").
1.3 Manner of Exercise. The Warrants are exercisable by delivery to
GMTH of the following (the "EXERCISE DOCUMENTS"): (a) this Certificate (b) a
written notice of election to exercise the Warrants; and (c) payment of the
Exercise Price in cash, by check or by "net" exercise as contemplated by Section
1.4 of this Certificate; provided that the Holder may not pay by "net" exercise
if the Holder may immediately following such exercise sell the shares acquired
upon such exercise pursuant a Registration Statement (as defined in Section 9 of
this Certificate). Within three business days following receipt of the
foregoing, GMTH shall execute and deliver to the Holder: (a) a certificate or
certificates representing the aggregate number of shares of Common Stock
purchased by the Holder, and (b) if less than all of the Warrants evidenced by
this Certificate are exercised, a new certificate evidencing the Warrants not so
exercised.
1.4 Net Exercise. In lieu of the payment methods set forth in Section
1.3 above, the Holder may elect to exchange all or some of the Warrants for the
number of shares of Common Stock computed using the following formula:
X = Y (A-B)
A
Where X = the number of shares of Common Stock to be issued to
Holder.
Y = the number of shares of Common Stock purchasable under the
Warrants being exchanged (as adjusted to the date of such
calculation).
A = the Market Price on the date of receipt by GMTH of the
exercise documents.
B = the Exercise Price of the Warrants being exchanged (as
adjusted in accordance with the terms of Section 2 hereof).
The "MARKET PRICE" on any trading day shall be deemed to be the last
reported sale price of the Common Stock on such day, or, in the case no such
reported sales take place on such day, the last reported sale price on the
preceding trading day on which there was a last reported sales price, as
officially reported by the principal securities exchange in which the shares of
Common Stock are listed or admitted to trading or by the Nasdaq Stock Market, or
if the Common Stock is not listed or admitted to trading on any national
securities exchange or the Nasdaq Stock Market, the last sale price, or if there
is no last sale price, the closing bid price, as furnished by the National
Association of Securities Dealers, Inc. (such as through the OTC Bulletin Board)
or a similar organization or if Nasdaq is no longer reporting such information.
1.5 Warrant Exercise Limitation. Notwithstanding any other provision of
this Certificate, if as of the date of exercise GMTH has a class of securities
registered under Section 12 of the Securities Exchange Act of 1934, as amended,
Holder may not exercise Warrants under this Section 1 to the extent that
immediately following such exercise Holder would beneficially own 5% or more of
the outstanding Common Stock of GMTH. For this purpose, a representation of the
Holder that following such exercise it would not beneficially own 5% or more of
the outstanding Common Stock of GMTH shall be conclusive and binding upon GMTH.
2. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER AND KIND OF CONVERSION SHARES
2.1 In the event that GMTH shall at any time hereafter (a) pay a
dividend in Common Stock or securities convertible into Common Stock; (b)
subdivide or split its outstanding Common Stock; (c) combine its outstanding
Common Stock into a smaller number of shares; then the number of shares to be
issued immediately after the occurrence of any such event shall be adjusted so
that the Holder thereafter may receive the number of shares of Common Stock it
would have owned immediately following such action if it had exercised the
Warrants immediately prior to such action and the Exercise Price shall be
adjusted to reflect such proportionate increases or decreases in the number of
shares.
2.2 In case of any reclassification of the outstanding shares of Common
Stock (other than a change covered by Section 2.1 hereof or a change which
solely affects the par value of
such shares) or in the case of any merger or consolidation or merger in which
GMTH is not the continuing corporation and which results in any reclassification
or capital reorganization of the outstanding shares), the Holder shall have the
right thereafter (until the Expiration Date) to receive upon the exercise
hereof, for the same aggregate Exercise Price payable hereunder immediately
prior to such event, the kind and amount of shares of stock or other securities
or property receivable upon such reclassification, capital reorganization,
merger or consolidation, by a Holder of the number of shares of Common Stock
obtainable upon the exercise of the Warrants immediately prior to such event;
and if any reclassification also results in a change in shares covered by
Section 2.1, then such adjustment shall be made pursuant to both this Section
2.2 and Section 2.1 (without duplication). The provisions of this Section 2.2
shall similarly apply to successive reclassifications, capital reorganizations
and mergers or consolidations, sales or other transfers.
3. RESERVATION OF SHARES. GMTH shall at all times reserve and keep available out
of its authorized but unissued shares of Common Stock, such number of shares of
Common Stock as shall from time to time be issuable upon exercise of the
Warrants. If at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to permit the exercise of the Warrants, GMTH shall
promptly seek such corporate action as may necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
4. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in the Exercise
Price, or number or type of shares issuable upon exercise of these Warrants, the
Chief Financial Officer of GMTH shall compute such adjustment in accordance with
the terms of these Warrants and prepare a certificate setting forth such
adjustment and showing in detail the facts upon which such adjustment is based,
including a statement of the adjusted Exercise Price. GMTH shall promptly send
(by facsimile and by either first class mail, postage prepaid or overnight
delivery) a copy of each such certificate to the Holder.
5. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to GMTH
of the ownership of and the loss, theft, destruction or mutilation of this
Certificate, and of indemnity reasonably satisfactory to it, and (in the case of
mutilation) upon surrender and cancellation of these Warrants, GMTH will execute
and deliver in lieu thereof a new Certificate of like tenor as the lost, stolen,
destroyed or mutilated Certificate.
6. REPRESENTATIONS AND WARRANTIES OF GMTH. GMTH hereby represents and warrants
to Holder that:
6.1 Due Authorization. All corporate action on the part of GMTH, its
officers, directors and shareholders necessary for (a) the authorization,
execution and delivery of, and the performance of all obligations of GMTH under,
these Warrants, and (b) the authorization, issuance, reservation for issuance
and delivery of all of the Common Stock issuable upon exercise of these
Warrants, has been duly taken. These Warrants constitute a valid and binding
obligation of GMTH enforceable in accordance with their terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors' rights generally and to
general equitable principles.
6.2 Organization. GMTH is a corporation duly organized, validly
existing and in good standing under the laws of the State referenced in the
first paragraph of this Certificate and has all requisite corporate power to
own, lease and operate its property and to carry on its business as now being
conducted and as currently proposed to be conducted.
6.3 Valid Issuance of Stock. Any shares of Common Stock issued upon
exercise of these Warrants will be duly and validly issued, fully paid and
non-assessable.
6.4 Governmental Consents. All consents, approvals, orders,
authorizations or registrations, qualifications, declarations or filings with
any federal or state governmental authority on the part of GMTH required in
connection with the consummation of the transactions contemplated herein have
been obtained.
7. REPRESENTATIONS AND WARRANTIES OF TRILOGY. Trilogy hereby represents and
warrants to GMTH that:
7.1 Trilogy is acquiring the Warrants for its own account, for
investment purposes only.
7.2 Trilogy understands that an investment in the Warrants involves a
high degree of risk, and Trilogy has the financial ability to bear the economic
risk of this investment in the Warrants, including a complete loss of such
investment. Trilogy has adequate means for providing for its current financial
needs and has no need for liquidity with respect to this investment.
7.3 Trilogy has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an investment
in the Warrants and in protecting its own interest in connection with this
transaction.
7.4 Trilogy understands that the Warrants have not been registered
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), or under
any state securities laws. Trilogy is familiar with the provisions of the
Securities Act and Rule 144 thereunder and understands that the restrictions on
transfer on the Warrants may result in Trilogy being required to hold the
Warrants for an indefinite period of time.
7.5 Trilogy agrees not to sell, transfer, assign, gift, create a
security interest in, or otherwise dispose of, with or without consideration
(collectively, "TRANSFER") any of the Warrants except pursuant to an effective
registration statement under the Securities Act or an exemption from
registration. As a further condition to any such Transfer, except in the event
that such Transfer is made pursuant to an effective registration statement under
the Securities Act, if in the reasonable opinion of counsel to GMTH any Transfer
of the Warrants by the contemplated transferee thereof would not be exempt from
the registration and prospectus delivery requirements of the Securities Act,
GMTH may require the contemplated transferee to furnish GMTH with an investment
letter setting forth such information and agreements as may be reasonably
requested by GMTH to ensure compliance by such transferee with the Securities
Act.
8. NOTICES OF RECORD DATE
In the event:
8.1 GMTH shall take a record of the holders of its Common Stock (or
other stock or securities at the time receivable upon the exercise of these
Warrants), for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities or to receive any other right; or
8.2 of any consolidation or merger of GMTH with or into another
corporation, any capital reorganization of GMTH, any reclassification of the
capital stock of GMTH, or any conveyance of all or substantially all of the
assets of GMTH to another corporation in which holders of GMTH's stock are to
receive stock, securities or property of another corporation; or
8.3 of any voluntary dissolution, liquidation or winding-up of GMTH; or
8.4 of any redemption or conversion of all outstanding Common Stock;
then, and in each such case, GMTH will mail or cause to be mailed to the Holder
a notice specifying, as the case may be, (a) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, or (b) the date
on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation, winding-up, redemption or conversion is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock (or such stock or securities as at the time are
receivable upon the exercise of these Warrants), shall be entitled to exchange
their shares of Common Stock (or such other stock or securities), for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up. GMTH
shall use all reasonable efforts to ensure such notice shall be delivered at
least 15 days prior to the date therein specified.
9. REGISTRATION RIGHTS
9.1 Definitions. For purposes of this Section 9, the following terms
shall have the meanings set forth below:
9.1.1 A "BLACKOUT EVENT" means any of the following: (a) the possession
by GMTH of material information that is not ripe for disclosure in a
registration statement or prospectus, as determined reasonably and in good faith
by the Chief Executive Officer or the Board of Directors of GMTH or that
disclosure of such information in the Registration Statement or the prospectus
constituting a part thereof would be materially detrimental to the business and
affairs of GMTH; or (b) any material engagement or activity by GMTH which would,
in the reasonable and good faith determination of the Chief Executive Officer or
the Board of Directors of GMTH, be materially adversely affected by disclosure
in a registration statement or prospectus at such time.
9.1.2 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
9.1.3 "INCLUDED SHARES" shall mean any Registrable Shares included in a
Registration.
9.1.4 "REGISTRABLE SHARES" shall mean the shares of Common Stock (or
such stock or securities as at the time are receivable upon the exercise of
these Warrants) issuable upon exercise of the Warrants and any other warrants
and or other securities issued to Trilogy in connection with performing investor
relations services for GMTH, and shares or securities issued as a result of
stock split, stock dividend or reclassification of such shares.
9.1.5 "REGISTRATION" shall mean a registration of securities under the
Securities Act pursuant to Section 9.2 or 9.3 of this Agreement.
9.1.6 "REGISTRATION PERIOD" with respect to any Registration Statement
the period commencing the effective date of the Registration Statement and
ending upon withdrawal or termination of the Registration Statement.
9.1.7 "REGISTRATION STATEMENT" shall mean the registration statement,
as amended from time to time, filed with the SEC in connection with a
Registration.
9.1.8 "SEC" shall mean the Securities and Exchange Commission.
9.2 Demand Registration. As soon as practicable, but in any event no
later than the earlier of 30 days following the date GMTH's Registration
Statement (File No. _______) becomes effective and February 15, 2005, GMTH shall
prepare and file with the SEC a Registration Statement for the purpose of
registering the sale of the Registrable Shares under the Securities Act, and
shall use its commercially reasonable efforts to cause the Registration
Statement to become effective within 60 days of the date of filing. Once
effective, GMTH shall prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus forming a part
thereof as may be necessary to keep the Registration Statement effective until
the earliest date on which (i) all the Included Shares have been disposed of
pursuant to the Registration Statement, or (ii) all of the Included Shares then
held by Holder may be sold under the provisions of Rule 144 without limitation
as to volume, whether pursuant to Rule 144(k) or otherwise.
9.3 Piggyback Registration. Unless the Registrable Shares are then
included in a Registration Statement or can be sold under the provisions of Rule
144 without limitation as to volume, whether pursuant to Rule 144(k) or
otherwise, if GMTH shall determine to register any Common Stock under the
Securities Act for sale in connection with a public offering of Common Stock
(other than pursuant to an employee benefit plan or a merger, acquisition or
similar transaction), GMTH will give written notice thereof to Holder and will
include in such Registration Statement any of the Registrable Shares which
Holder may request be included ("INCLUDED SHARES") by a writing delivered to
GMTH within 15 days after the notice given by GMTH to Holder; provided, however,
that if the offering is to be firmly underwritten, and the representative of the
underwriters of the offering refuses in writing to include in the offering all
of the shares of Common Stock requested by GMTH and others, the shares to be
included shall be allocated first to GMTH and any shareholder who initiated such
Registration and then among the others based on the respective number of shares
of Common Stock held by such persons. If GMTH decides not to, and does not, file
a Registration Statement with respect to such Registration, or after filing
determines to withdraw the same before the effective date thereof,
GMTH will promptly so inform Holder, and GMTH will not be obligated to complete
the registration of the Included Shares included therein.
9.4 Certain Covenants. In connection with any Registration:
9.4.1 GMTH shall take all lawful action such that the Registration
Statement, any amendment thereto and the prospectus forming a part thereof does
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading. Upon
becoming aware of the occurrence of any event or the discovery of any facts
during the Registration Period that make any statement of a material fact made
in the Registration Statement or the related prospectus untrue in any material
respect or which material fact is omitted from the Registration Statement or
related prospectus that requires the making of any changes in the Registration
Statement or related prospectus so that it will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading (taking into account any prior amendments or supplements), GMTH shall
promptly notify Holder, and, subject to the provisions of Section 9.5, as soon
as reasonably practicable prepare (but, subject to Section 9.5, in no event more
than five business days in the case of a supplement or seven business days in
the case of a post-effective amendment) and file with the SEC a supplement or
post-effective amendment to the Registration Statement or the related prospectus
or file any other required document so that, as thereafter delivered to a
purchaser of Shares from Holder, such prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
9.4.2 At least three business days prior to the filing with the SEC of
the Registration Statement (or any amendment thereto) or the prospectus forming
a part thereof (or any supplement thereto), GMTH shall provide draft copies
thereof to Holder and shall consider incorporating into such documents such
comments as Holder (and its counsel) may propose to be incorporated therein.
Notwithstanding the foregoing, no prospectus supplement, the form of which has
previously been provided to Holder, need be delivered in draft form to Holder.
9.4.3 GMTH shall promptly notify Holder upon the occurrence of any of
the following events in respect of the Registration Statement or the prospectus
forming a part thereof: (i) the receipt of any request for additional
information from the SEC or any other federal or state governmental authority,
the response to which would require any amendments or supplements to the
Registration Statement or related prospectus; (ii) the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; or (iii) the receipt of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
9.4.4 GMTH shall furnish to Holder with respect to the Included Shares
registered under the Registration Statement (and to each underwriter, if any, of
such Shares) such number of copies of prospectuses and such other documents as
Holder may reasonably request,
in order to facilitate the public sale or other disposition of all or any of the
Included Shares by Holder pursuant to the Registration Statement.
9.4.5 In connection with any registration pursuant to Section 9.2, GMTH
shall file or cause to be filed such documents as are required to be filed by
GMTH for normal Blue Sky clearance in states specified in writing by Holder;
provided, however, that GMTH shall not be required to qualify to do business or
consent to service of process in any jurisdiction in which it is not now so
qualified or has not so consented.
9.4.6 GMTH shall bear and pay all expenses incurred by it and Holder
(other than underwriting discounts, brokerage fees and commissions and fees and
expenses of more than one law firm) in connection with the registration of the
Shares pursuant to the Registration Statement.
9.4.7 As a condition to including Registrable Shares in a Registration
Statement, Holder must provide to GMTH such information regarding itself, the
Registrable Shares held by it and the intended method of distribution of such
Shares as shall be required to effect the registration of the Registrable Shares
and, if the offering is being underwritten, Holder must provide such powers of
attorney, indemnities and other documents as may be reasonably requested by the
managing underwriter.
9.4.8 Following the effectiveness of the Registration Statement, upon
receipt from GMTH of a notice that the Registration Statement contains an untrue
statement of material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, Holder will immediately
discontinue disposition of Included Shares pursuant to the Registration
Statement until GMTH notifies Holder that it may resume sales of Included Shares
and, if necessary, provides to Holder copies of the supplemental or amended
prospectus.
9.5 Blackout Event. GMTH shall not be obligated to file a
post-effective amendment or supplement to the Registration Statement or the
prospectus constituting a part thereof during the continuance of a Blackout
Event; provided, however, that no Blackout Event may be deemed to exist for more
than 60 days. Without the express written consent of Holder, if required to
permit the continued sale of Shares by Holder, a post-effective amendment or
supplement to Registration Statement or the prospectus constituting a part
thereof must be filed no later than the 61st day following commencement of a
Blackout Event.
9.6 Rule 144. With a view to making available to Holder the benefits of
Rule 144, GMTH agrees, until Holder can sell all remaining Registrable Shares
under the provisions Rule 144(k), to:
(i) comply with the provisions of paragraph (c)(1) of Rule 144; and
(ii) file with the SEC in a timely manner all reports and other
documents required to be filed by GMTH pursuant to Section 13 or 15(d) under the
Exchange Act; and, if at any time it is not required to file such reports but in
the past had been required to or did file such reports, it will, upon the
request of a Purchaser, make available other information as required by, and so
long as necessary to permit sales of its Shares pursuant to, Rule 144.
9.7 GMTH Indemnification. GMTH agrees to indemnify and hold harmless
Holder, and its officers, directors and agents, and each person, if any, who
controls Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities caused by (i) any violation or alleged violation by GMTH
of the Securities Act, Exchange Act, any state securities laws or any rule or
regulation promulgated under the Securities Act, Exchange Act or any state
securities laws, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
the Included Shares (as amended or supplemented if GMTH shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or (iii)
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information furnished in writing to GMTH by Holder or on Holder's behalf
expressly for use therein.
9.8 Holder Indemnification. Holder agrees to indemnify and hold
harmless GMTH, its officers, directors and agents and each person, if any, who
controls GMTH within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from GMTH to Holder, but only with respect to information furnished in writing
by Holder or on Holder's behalf expressly for use in any registration statement
or prospectus relating to the Registrable Shares, or any amendment or supplement
thereto, or any preliminary prospectus.
9.9 Indemnification Procedures. In case any proceeding (including any
governmental investigation) shall be instituted involving any person in respect
of which indemnity may be sought pursuant to this Section 10, such person (an
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses; provided that the failure of any Indemnified
Party so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent (and only to the extent
that) that the Indemnifying Party is materially prejudiced by such failure to
notify. In any such proceeding, any Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) in the reasonable judgment of such Indemnified Party representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties (including in the case of Holder, all of its
officers, directors and controlling persons) and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Indemnified Parties, the Indemnified Parties shall designate such firm
in writing to the Indemnifying Party. The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its written consent (which
consent shall not be unreasonably
withheld or delayed), but if settled with such consent, or if there be a final
judgment for the plaintiff, the Indemnifying Party shall indemnify and hold
harmless such Indemnified Parties from and against any loss or liability (to the
extent stated above) by reason of such settlement or judgment. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such proceeding.
9.10 Contribution. To the extent any indemnification by an Indemnifying
Party is prohibited or limited by law, the Indemnifying Party agrees to make the
maximum contribution with respect to any amounts for which, he, she or it would
otherwise be liable under this Section 10.6 to the fullest extent permitted by
law; provided, however, that (i) no contribution shall be made under
circumstances where a party would not have been liable for indemnification under
this Section 10.6 and (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning used in the Securities Act)
shall be entitled to contribution from any party who was not guilty of such
fraudulent misrepresentation. If GMTH shall determine to register any Common
Stock under the Securities Act for sale in connection with a public offering of
Common Stock (other than pursuant to an employee benefit plan or a merger,
acquisition or similar transaction), GMTH will give written notice thereof to
Holder and will include in such registration any of the Registrable Shares which
Holder may request be included ("INCLUDED SHARES") by a writing delivered to
GMTH within 15 days after the notice given by GMTH to Holder; provided, however,
that if the offering is to be firmly underwritten, and the representative of the
underwriters of the offering refuse in writing to include in the offering all of
the shares of Common Stock requested by GMTH and others, the shares to be
included shall be allocated first to GMTH and any shareholder who initiated such
registration and then among the others based on the respective number of shares
of Common Stock held by such persons. If GMTH decides not to, and does not, file
a registration statement with respect to such registration, or after filing
determines to withdraw the same before the effective date thereof, GMTH will
promptly so inform Holder, and GMTH will not be obligated to complete the
registration of the Included Shares included therein. GMTH will pay all costs
and expenses of such registration other than underwriting discounts or brokerage
fees or commissions in connection with the sale of the Included Shares and fees
and costs of accountants, attorneys or others retained by Holder. For purposes
of this Agreement, "REGISTRABLE SHARES" shall mean the shares of Common Stock
(or such stock or securities as at the time are receivable upon the exercise of
these Warrants) issuable upon exercise of the Warrants and any shares issued as
a result of stock split, stock dividend or reclassification of such shares;
PROVIDED, HOWEVER, that any share shall cease to be a Registrable Share if and
when (a) it has been effectively registered under the Securities Act and
disposed of pursuant thereto, or (b) the holder may sell such share (or in the
case of a share not yet issued under this Warrant, the holder may exercise this
Warrant, including pursuant to Section 1.4, and sell such share issued upon such
exercise) in the market on which GMTH common stock is then traded without
registration under the Securities Act.
10. NONTRANSFERABILITY. Trilogy may not sell or transfer any Warrants to any
person other than an affiliate of Trilogy without the written consent of GMTH.
11. SEVERABILITY. If any term, provision, covenant or restriction of these
Warrants is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of these Warrants shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
12. NOTICES. All notices, requests, consents and other communications required
hereunder shall be in writing and shall be effective when delivered or, if
delivered by registered or certified mail, postage prepaid, return receipt
requested, shall be effective on the third day following deposit in United
States mail: to the Holder, at Trilogy Capital Partners, Inc., 0000 0/0 Xxxxxx
Xxxxxx, Xxx Xxxxxxx, XX 00000; and if addressed to GMTH, at Global Matrechs,
Inc., Attn: Xxxxxxx Xxxxxxxx, President and CEO, 00 Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxxxxx, 00000, or such other address as Holder or GMTH may
designate in writing.
13. NO RIGHTS AS SHAREHOLDER. The Holder shall have no rights as a shareholder
of GMTH with respect to the shares issuable upon exercise of the Warrants until
the receipt by GMTH of all of the Exercise Documents.
GLOBAL MATRECHS, INC.
By: __________________________
Its: _________________________
EXHIBIT "A"
NOTICE OF EXERCISE
(TO BE SIGNED ONLY UPON EXERCISE OF THE WARRANTS)
To: Global Matrechs, Inc.
The undersigned hereby elects to purchase shares of Common Stock (the
"WARRANT SHARES") of Global Matrechs, Inc. ("GMTH"), pursuant to the terms of
the enclosed warrant certificate (the "CERTIFICATE"). The undersigned tenders
herewith payment of the exercise price pursuant to the terms of the Certificate.
The undersigned hereby represents and warrants to, and agrees with,
GMTH as follows:
1. Holder is acquiring the Warrant Shares for its own account, for
investment purposes only.
2. Holder understands that an investment in the Warrant Shares involves
a high degree of risk, and Holder has the financial ability to bear the economic
risk of this investment in the Warrant Shares, including a complete loss of such
investment. Holder has adequate means for providing for its current financial
needs and has no need for liquidity with respect to this investment.
3. Holder has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an investment
in the Warrant Shares and in protecting its own interest in connection with this
transaction.
4. Holder understands that the Warrant Shares have not been registered
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), or under
any state securities laws. Holder is familiar with the provisions of the
Securities Act and Rule 144 thereunder and understands that the restrictions on
transfer on the Warrant Shares may result in Holder being required to hold the
Warrant Shares for an indefinite period of time.
5. Holder agrees not to sell, transfer, assign, gift, create a security
interest in, or otherwise dispose of, with or without consideration
(collectively, "TRANSFER") any of the Warrant Shares except pursuant to an
effective registration statement under the Securities Act or an exemption from
registration. As a further condition to any such Transfer, except in the event
that such Transfer is made pursuant to an effective registration statement under
the Securities Act, if in the reasonable opinion of counsel to GMTH any Transfer
of the Warrant Shares by the contemplated transferee thereof would not be exempt
from the registration and prospectus delivery requirements of the Securities
Act, GMTH may require the contemplated transferee to furnish GMTH with an
investment letter setting forth such information and agreements as may be
reasonably requested by GMTH to ensure compliance by such transferee with the
Securities Act.
Each certificate evidencing the Warrant Shares will bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY APPLICABLE STATE SECURITIES LAWS
AND MAY NOT BE EXERCISED, SOLD, PLEDGED OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
6. The Holder is either an "accredited investor" as defined under
Regulation D of the Securities and Exchange Commission under the Securities Act
or has reviewed the most recent Form 10-K filed by GMTH under the Securities
Exchange Act of 1934, as amended, and each other filing by GMTH under such Act
filed thereafter.
7. Immediately following this exercise of Warrants, if as of the date
of exercise GMTH has a class of securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended, the undersigned will not
beneficially own five percent (5%) or more of the then outstanding Common Stock
of GMTH (based on the number of shares outstanding set forth in the most recent
periodic report filed by GMTH with the Securities and Exchange Commission and
any additional shares which have been issued since that date of which Holder is
aware have been issued).
Number of Warrants Exercised: ______________
Net Exercise ____ Yes ___ No
Dated: ____________________
_______________________________
